During the Great Recession, the U.S. government increased spending in an attempt to buoy the economy. Since, at the time, economic growth was stagnant—and even declining in some quarters—there was not enough government revenue generated to keep pace with spending. Consequently, the government engaged in “deficit spending.” What are fiscal deficits? What are the consequences of deficits?
2. Work on a one-sentence summary of recession. (Note: This is just a one sentence)
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Also, fiscal deficits lead to the increased national debt through the borrowing of money for operating expenses, and this will result in the continued accumulation of debt. For instance, in 2011, the U.S. Congress was forced to make decisions on raising the nation’s debt ceiling or risk the country defaulting on its debt obligations (“U.S. Debt Ceiling: Costs and Consequences,” 2013). Another consequence is that continued borrowing of money leads to positive economic growth. This continued economic contraction threatens to create an even greater global economic
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